Business Continuity Planning – Definition

Cite this article as:"Business Continuity Planning – Definition," in The Business Professor, updated September 14, 2019, last accessed October 20, 2020, https://thebusinessprofessor.com/lesson/business-continuity-planning-definition/.

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Business Continuity Planning (BCP) Definition

Business continuity planning (BCP) refers to the mechanism of developing different measures so as to protect and recover a business from prospective threats. The main objective of BCP is to make sure that the staff as well as assets of the firm remain safe, and the business can cope up effectively during disasters. This type of planning is done beforehand, and the prime stakeholders and executives of the firm are asked to give their views.

BCP includes identifying each and every risk that can have a negative impact on the functioning of the firm. It is considered to be a crucial element of the risk management strategy of a firm. These risks involve natural disasters like fire, flood, earthquakes, and cyber attacks. After the identification of risks, it is important for planners to include the following elements in the BCP:

  • Ascertaining the impact of those risks on a company’s operations
  • Executing prevention processes to reduce the risks
  • Simulating processes in order to make sure that they function well
  • Analyzing the procedure to ensure of its timeliness

Every firm or organization requires to have BCP. No firm would like to face threats or damages because more threats or damages means less revenues, less profits, and more expenses. Firms cannot solely depend on insurance companies for mitigating their losses or risks as they don’t give damages for all the losses. Also, your customers may switch to your competitors once your operations are affected.

A Little More on What is Business Continuity Planning (BCP)

Organizations can be affected by a mountain of risks varying from small to disastrous. Business continuity planning enables a company to continue its operations in the event of huge disasters like fire, flood, etc. BCPs and disaster recovery plan are two different terms with different relevance. The latter emphasizes on recovering the IT system of a firm post-crisis stage.

A finance organization, located in a big city, can implement BCP by creating a data backup of its computers, and client information off the site. Since the company already has got the backup of its crucial information outside its office, it won’t be affected by any disasters or threats disrupting the company’s system.

However, it must be noted that the BCP tends to be ineffective in case a large number of people get affected by the disaster.

Developing a Business Continuity Plan

A company needs to follow the following steps for creating an effective BCP:

  • The Business Impact Analysis: The organization will determine time-sensitive resources and information.
  • Recovery: This stage involves organizations to implement procedures in order to retrieve crucial business operations.
  • Organization: This stage asks for building a continuity team that will create a plan to effectively manage the disaster.
  • Training: The continuity team should be offered sound training, and tested in dummy situations. They should also finish modules related to the plan and strategies.

Organizations may also devise a checklist that includes vital information like the emergency contact details, resources that the members of the team may require, the place where backup information is stored, etc.

Besides testing the skills of continuity team, the firm should test the business continuity plan so as to ensure its effective functioning. And, its functioning needs to be checked a lot of times for knowing several risk situations it can be implemented in. This enables in reviewing and controlling the plan’s shortcomings before the actual disaster takes place

(Note: For making a BCP succeed, all employees, whether they are a part of continuity team or not, must completely know about the plan.)

Key points

  • Business continuity plan refers to a procedure undertaken by the firm to establish a prevention and recovery mechanism, and helping the company from prospective disasters and threats.
  • BCP safeguards the company’s assets and personnel, and further ensures that their performance doesn’t get affected in the event of a disaster.
  • A company should test BCPs many times in order to make sure that any drawback is corrected or reviewed at the right time.

Business Continuity Impact Analysis

The creation of a BCP involves a business continuity impact analysis. It determines the consequences that a business might face during disasters. It makes use of the information in establishing decision-making strategies for prioritizing recovery of the business.

FEMA offers the Operations & Financial Impacts Worksheet to enable an organization follow an effective business continuity analysis. Organization’s function and process executives who are familiar with the business fill required information in this worksheet. These worksheets give a summary of:

  • The financial and functional consequences that the business would face during or after a disaster.
  • Determining the point where the absence of a specific function or process would cause identified organizational impact.

Once the companies finish this analysis, they know which activities and process of the company hold a huge impact on its financial and economic performance. The stage at which they need to be recovered anyhow is called the ‘Recovery Time Objective’.

Reference for “Business Continuity Planning (BCP)”

https://www.techopedia.com/definition/3/business-continuity-plan-bcp

https://www.investopedia.com › Insights › Markets & Economy

https://en.wikipedia.org/wiki/Business_continuity_planning

https://www.techopedia.com/definition/3/business-continuity-plan-bcp

https://searchdisasterrecovery.techtarget.com/definition/business-continuity-action-plan

Academics research on “Business Continuity Planning (BCP)”

An institutional theory perspective of business continuity planning for purchasing and supply management, Zsidisin*, G. A., Melnyk, S. A., & Ragatz, G. L. (2005). An institutional theory perspective of business continuity planning for purchasing and supply management. International journal of production research43(16), 3401-3420. Supply chains are increasingly susceptible to unplanned, unanticipated disruptions. With the implementation of the practices of lean systems, total quality management (TQM), time-based competition and other supply chain improvement initiatives, managers now realize that their supply chains are fragile, particularly to environmental disruptions outside their control. As a result of recent events including 11 September 2001, a system is now emerging in purchasing to manage supply risk characterised as having a very low probability of occurrence, difficult to predict, and with a potentially catastrophic impact on the organization. This paper presents case study research findings examining how and why firms create business continuity plans to manage this risk. Propositions are then presented from an institutional theory perspective to examine how various isomorphic pressures result in firms having similar risk management practices embedded in their supply management practices over time.

A cyclic approach to business continuity planning, Botha, J., & Von Solms, R. (2004). A cyclic approach to business continuity planning. Information Management & Computer Security12(4), 328-337. In a world where continuous operations are essential for business survival, action must be taken to ensure that information and the business processes that use the information are continuously available. This usually involves the selection and implementation of a suitable business continuity plan. Implementing such a plan is, however, not always a simple task. This especially holds true for small to medium‐sized organizations. An implementation method that could be applied to most business continuity planning methodologies would, therefore, be a welcome tool, especially for small to medium‐sized organisations. This paper presents a theoretical model for such an implementation method.

Business continuity planning, Savage, M. (2002). Business continuity planning. Work study51(5), 254-261. The 11 September tragedy in the USA has provided a wake up call to remind businesses of the need for adequate disaster recovery and business continuity planning. A business continuity plan must be comprehensive and up to date. This paper outlines the key content of such a plan and the issues to be addressed in drawing one up to ensure it meets real business recovery needs. Continues the plan through to the actions needed to handle an actual emergency.

Business continuity planning as a facilities management tool, Pitt, M., & Goyal, S. (2004). Business continuity planning as a facilities management tool. Facilities22(3/4), 87-99. The inevitability of crises within the business environment suggests that the majority of organisations should have a business continuity plan (BCP). This work highlights those organisations that do not plan in this way and those which focus on information technology rather than utilising a holistic, integrated approach. Through extensive primary research this paper explores the current uptake and scope of business continuity planning within the business environment in the UK. The paper shows that the viability and effectiveness of BCPs is dependent on regular review, audit and testing.

Contingency and continua: achieving excellence through business continuity planning, Herbane, B., Elliott, D., & Swartz, E. (1997). Contingency and continua: achieving excellence through business continuity planning. Business Horizons40(6), 19-26. Business continuity planning is an effective disaster prevention approach adopted by firms in ensuring competency and efficient operations during disasters or risks. However, the approach requires high degree of employee coordination and CEO involvement.

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